Dolat Capital Market's research report on Colgate-Palmolive India
Colgate’s Q3FY21 revenue and EBITDA were in line with our expectation but APAT was marginally ahead. Domestic business posted 10.1% sales growth during Q3. All categories witnessed positive growth driven by household penetration. A 400bps expansion in GM was a key positive. With better product mix, we expect gross margins to remain healthy. A&P spends increased significantly by 360bps, to support innovations. We believe that the A&P spends would remain elevated to support volume growth and gain market share. Going ahead, government efforts to increase farmer’s wages and focus on rural infrastructure should boost oral care category. However, increase in competition and better product offerings by competitors like Dabur remains a key challenge for Colgate.
We have revised our FY21/22/23E EPS estimates to Rs 36.1/36.9/40.9. We value the stock at 43x FY23 EPS (In line with peers) to arrive at a TP of Rs 1,760. Upgrade to Accumulate.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.